TOKYO (Reuters) – Japan’s government gave a bleaker view on exports in a monthly report in May as the world’s third-largest economy grapples with the fallout of the global coronavirus pandemic.
While it left its overall assessment that the economy is in an “extremely severe situation” unchanged, the government also lowered its view on the labour market and corporate investment, the report released on Thursday showed.
The assessment comes as Japan’s export-reliant economy has fallen into recession for the first time in 4-1/2 years. The government this week lifted a nationwide state of emergency as it tries to reopen the economy.
The government said exports are decreasing “rapidly”, changing its previous assessment of just “decreasing”, due to the pandemic with shipments to the United States and Europe especially hard hit.
Data last week showed Japan’s exports fell the most since the 2009 financial crisis in April as global demand for goods such as cars and industrial materials dropped.
Analysts worry the economy could fall deeper into recession – two consecutive quarters of contraction – as the state of emergency in April kept citizens at home and restaurants and shops closed.
Prime Minister Shinzo Abe’s cabinet on Wednesday approved a new $1.1 trillion stimulus package that includes significant fiscal spending in an effort to cushion the economic blow.
The government kept its view that private consumption was decreasing rapidly. Consumption was weak during the month apart from somewhat good sales of home electronics during the Golden Week holidays, a government official said.
It said weakness in the employment situation “is increasing” due to the impact of the coronavirus, having previously just said “weak movements can be seen”.
The government also made a bleaker assessment of business investment saying it was “of a weak tone recently” having previously described it as being “largely flat”.
(Reporting by Daniel Leussink; Editing by Ana Nicolaci da Costa)